Why pay-per-play could be the future of YouTube

The third largest 'country' in the world could be the most profitable

"Virgin Media has added a YouTube app to its EPG for its TiVo customers, answering their demand for access to online video," says Brett Sappington, Research Director at Parks Associates, who thinks that as consumers change their video-viewing habits as a result of online content, operators need to change their business models.

The study also found that over a quarter of US households with broadband had watched a full-length film on a computer during the last two weeks.

YouTube knows its audience only too well, of course, and in a recent report dubbed them 'Generation C'. Standing for connection, creation, community and curation, Generation C-ers - and you're probably one of them - constantly switch between devices; they watch, create and upload videos, share links, and genuinely care about finding content that matters to them.

"For the first time, an entire generation has grown up watching content on their own terms," reads the report. "This generation is defined by the Internet, mobile, and social [media] - consuming content when and where they want."

Cultural tastemakers

Generation C is not an age-based demographic. Analysts Nielsen, which coined the phrase, call these people powerful 'cultural tastemakers', but since they're 45% more likely to be light consumers of traditional TV programming - instead watching videos on all kinds of devices - they're hard for advertisers to pinpoint.

One way to square the circle and make YouTube content a central pillar of home entertainment is Google TV. However, though Sony and LG are continuing to create products for it, Google TV has not had much success.

Most new smart TVs can access YouTube in some shape or form, as can games consoles, but the entire strategy of moving into living rooms - something called YouTube Leanback - is being better done through a new app that's available across all platforms, as apps on Freesat and other set-top boxes from the likes of Pure and even in any web browser.

Linking to a plethora of devices using a PIN code activation pairing procedure, it's possible to save videos to a 'watch later' list while using an iPad and continuing from where you left off on a smart TV, with channel subscriptions remaining visible, too.

However, the real improvement is in the HTML5-powered user interface, which is cleverly optimised for TV while also working brilliantly on tablets and phones; it's best used on both, with searching done on the second screen.

The new-look YouTube is vitally important since as many people now watch YouTube on a smartphone as on a desktop computer. 25% of global YouTube views come from mobile devices - a figure that's sure to rise quickly.

YouTube: the rivals

Despite its popularity and ambitions, YouTube isn't the global arbiter of videos that it thinks it is. It's banned in China (since 2009), Iran, Pakistan, Syria and Turkmenistan. That's about 1.6 billion people. There's also a flurry of competitors, such as DailyMotion, Metacafe, Blip and Vimeo, though more competitors will follow - notably from one of YouTube's co-founders, Chad Hurley.

Hurley, who left YouTube three years ago and owns bookmarking site Delicious, is reported by Adweek to be prepping a new video-based platform better suited for collaboration. Though its dominance continues, YouTube's appeal to some is not what it was.

"We generally use YouTube for the simple fact that it is where most labels and artists upload their videos," says Hill, though he reckons the majority of audio files are now hosted at Soundcloud and Bandcamp, having eschewed YouTube.

So could YouTube's dominance be on the wane? "I'd be very happy if Vimeo replaced YouTube for all music videos as the player, video and audio quality are all far superior to even the modern, HTML5 YouTube player in 1080," says Hill.

Will YouTube go the same way as its only other 'billion views per month' rival, Facebook, where only sponsored posts are guaranteed to be seen by followers?

Facebook's News Feed pages are destined to become more video-heavy and advertising-based, but this increasingly corporate - and, frankly, very off-putting - strategy raked in US$1.59 billion in the last three months of 2011.

Movie rentals are coming, and it might prove hard for YouTube to resist subscriptions and more advertising, but would you pay for YouTube? "It might not be the absolute best at any one thing," says Hill, though he does think its current business model is a major reason for its popularity. "That's probably the main advantage of YouTube - it's free."